Fed keeps rates near 3.9% as inflation stays hot and hike risk lingers
The Federal Reserve held its key rate at about 3.9% on Wednesday as inflation stays elevated, with two officials backing a further hike, Moody's reports.
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what happened
The Federal Reserve left its benchmark rate unchanged on Wednesday at roughly 3.9%, even though price growth remains stubbornly high. In its statement, according to Moody's, the central bank said inflation was still elevated and that it needed more data before choosing its next step toward the 2% target.
Chairman Kevin Warsh's Fed lifted rates last month for the first time in three years, a move that went against calls from President Donald Trump for cuts. Governor Lisa Cook and Cleveland Fed President Beth Hammack voted for a quarter-point increase. Futures markets now price in a hike in December.
Consumer prices rose 3.7% in September from a year earlier, unemployment stands at 4.2%, and economists expect third-quarter growth of about 3%.
why it matters
Mortgage rates reached a three-year high of 7.4% earlier this month, and borrowing costs are already squeezing housing affordability. For markets, a hawkish hold tends to support Treasury yields and the dollar while adding pressure on equity valuations. The next checks come with Thursday's PCE inflation and GDP data.
market impact
US dollar and Treasuries: hawkish Fed stance supports yields and the dollar, pressures stocks
- US dollar pressure up — a hawkish hold with a possible December hike supports the currency
- US stocks pressure down — higher-for-longer rates raise borrowing costs and pressure valuations
tags
instruments
sources
- Fed holds interest rates steady at 3.9% as US inflation remains elevated — Moody's, 28 October 2026 at 23:01 UTC
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